In the aftermath of Hurricane
Katrina some Democratic Party politicians and even conservative newspapers like
the New York Daily News were calling
for a “new ‘New Deal’” to deal with the destruction wrought, and with the
broader social problems exposed in its wake.

Some pundits even claimed the
reaction against Bush’s apathy toward Gulf residents’ needs would help shift
the country’s politics back to the left. For instance, the Nation’s William Greider predicted that “[t]he catastrophe…is
one of those big moments that jolt public consciousness and alter the course of
national history.” He predicted “a dramatic breakdown for the reigning
right-wing orthodoxy, the beginning of its retreat and eventual demise.” Greider took as good coin the rhetoric of Democrats who “are doing what they
haven’t dared to do for many years, even decades: They are invoking their New
Deal legacy and applying its liberal operating assumptions to the present
crisis…only the federal government has the resources and authority to lead such
a complex undertaking.”

For most working people the phrase “New
Deal,” based on the commonly accepted mythology of what happened in the early
years of Franklin Delano Roosevelt’s administration, conjures up welcome
pictures of public works jobs for all who needed them, of gigantic public works
projects rebuilding old institutions and building brand new ones, of government
concern for the down and out. Those Democratic Party politicians who were
throwing around Rooseveltian rhetoric may even believe this mythology. But the
rebuilding packages they put forward fall far short of what FDR was alleged to
have achieved, and are instead more in synch with today’s bipartisan consensus
that the market is a cure-all for whatever ails you.

The more astute Democratic
politicians, however, know precisely the limits of the New Deal and in some
ways their miserly proposals more accurately match the overall picture of Roosevelt administration policy.

Barely a month after Katrina even
the few Democrats who had early on engaged in New Deal-style rhetoric had
largely fallen mute, and by mid-October the New
York Times could report that Republicans were once again pressing their
plans to save the Gulf and the economy as a whole with even more tax cuts for
the corporations and the rich. “We’ve had a stunning reversal in just a few
weeks,” said Robert Greenstein of the liberal Center on Budget and Policy
Priorities. “We’ve gone from a situation in which we might have a long-overdue
debate on deep poverty to the possibility, perhaps even the likelihood, that
low-income people will be asked to bear the costs. I would find it unimaginable
if it wasn’t actually happening.”

But the inability, in fact the
unwillingness, of the Democratic Party to take its own rhetoric seriously made
this turn of events predictable. In a future article we’ll go into the nature
of today’s Democratic Party. But for historical context let’s take a look at
the reality behind the New Deal mythology.

What
Really Happened

FDR used the phrase “New Deal” in
his 1932 campaign, but the main theme of his thoroughly mainstream platform was
cutting the deficit. His secretary of labor, Frances Perkins, later said it was
only a “happy phrase” to make people feel better.

The very first task undertaken by Roosevelt upon taking office was saving the country’s
banks, which had shut down the day of his inauguration. The motivations and
machinations of FDR’s banking experts are well-described by one of his most
ardent supporters, historian Arthur M. Schlesinger, Jr., in the second volume
of his three-volume tribute, “The Age of Roosevelt.” Schlesinger quotes FDR
aide Raymond Moley to the effect that those working on the emergency banking legislation
had “forgotten to be Republicans or Democrats. We were just a bunch of men
trying to save the banking system.” And by saving the system they meant
consolidating the hold of the biggest banks.

At a time when even some liberal
members of Congress pleaded with Roosevelt to establish a national banking
system, Roosevelt’s reply was: “That isn’t
necessary at all.I’ve just had every
assurance of cooperation from the bankers.” Concludes Schlesinger, “the very
moneychangers, whose flight from their high seats in the temple the President
had so grandiloquently proclaimed in his inaugural address, were now swarming
through the corridors of the Treasury.” And they were there to help Roosevelt’s advisers craft the new bills, which would
tighten their grip on the nation’s banks (much as the big energy companies
worked in the White House to help Dick Cheney craft Bush’s energy bill.) The
result, says Moley, of FDR’s conservative policies, was that “capitalism was
saved in eight days.”

Yet Schlesinger also cites Senator
Bronson Cutting of New Mexico,
who wrote years later: “The nationalization of banks by President Roosevelt
could have been accomplished without a word of protest. It [not doing so] was
President Roosevelt’s great mistake.”

FDR himself testified to his
motivations in this and subsequent policy decisions: “No one in the United States
believes more firmly than I in the system of private business, private property
and private profit. No Administration in the history of our country has done
more for it. It was this Administration which dragged it back out of the pit
into which it had fallen in 1933.” He even put his finger on the real value of
liberals to the system: “the most serious threat to our institutions comes from
those who refuse to face the need for change. Liberalism becomes the protection
for the far-sighted conservative.”

Restoring Prosperity?

Once the system was saved from
total meltdown, Roosevelt and his “Brain Trust”
initiated a variety of programs to convince the country that they could end the
Depression. One such was the public works program, most famous in its later WPA
(Works Progress Administration) incarnation, but originally known as the Public
Works Administration, and which was originally proposed by some FDR advisers to
work in tandem with the National Recovery Administration. Together the two
would hasten recovery: the former would put money in the pockets of workers so
that they could spend them on businesses overseen by the latter.

But almost immediately the two
programs were decoupled (Schlesinger calls it an “amputation”), and PWA
spending flowed to a trickle. As a result the “NRA had lost its engine of
expansion,” and it was decided that economic stimulus was to come not from
public spending but indirectly through a revived market based on renewed
business confidence, thus yielding greater purchasing power. This was entirely
in keeping with Roosevelt’s faith in the
ability of market forces to eventually right the ship of the economy, and his
reluctance to spend any more government funds than was absolutely necessary.

The NRA was supposedly a trade-off:
corporations would enjoy the suspension of antitrust laws in return for
voluntary agreements to minimum wage levels and maximum hours. But the wages in
the codes—which were written by the corporations themselves—were so low, and
the hours so long, that they provoked countless strikes and organizing efforts
around the country.

Says Schlesinger: “though the code
authority exercised public powers, it was not a public body. It was, as [NRA
administrator Hugh] Johnson put it, ‘an agency of the employers in an industry.’” The result was just enough renewed
economic activity to keep the biggest corporations from going under. Thus
Maurice Spector could write in the New
International in 1938 that there had been no recovery in the sense of an
expansion of capital, of increasing opportunities for accumulation, which is
the norm for a recovering capitalist economy. Instead “capital secured its
profits by restriction” of production, reviving existing production facilities
to levels still below the 1920s peaks. In fact it’s universally acknowledged,
even by the most ardent mainstream academic defenders of Roosevelt,
that the system did not fully recover until the war and the associated meteoric
expansion of production for war.

The Public Works Record

Throughout Roosevelt’s
administration spending on public works and jobs rose and fell in reaction to
protest, and was never as large as contemporary or later mythologists made it
out to be. FDR aide Harry L. Hopkins estimated the average annual expenditure
on unemployed relief from 1933 to 1936 at about $1.7 billion. In contrast, Roosevelt spent $79 billion on the war in 1943, $95
billion in 1944 and over $100 billion in 1945. The record in housing construction
is a good example of the disparity: whereas from 1933 to 1937 the Public Works
Administration built only 25,000 units of public housing (not much more than
union-owned banks had financed in the 1920s), roughly 20 times as many units
were built in Roosevelt’s third and fourth terms, so that workers could settle
near new war plants.

Nancy Rose, author of Put to Work: Relief Programs in the Great
Depression, says unemployment, which was at 25 percent in 1933, was still
nearly 15 percent in 1940. This despite the various public works programs that
came and went, each typically lasting a few months. There was the Federal
Emergency Relief Administration, the Civil Works Administration, the Works
Progress Administration, the Civil Conservation Corps, and the National Youth
Administration (plus the Public Works Administration, which used public funds
to stimulate private hiring).

Even at the high point of public hiring under the WPA,
jobs were provided for only one-third of the unemployed. Only about a quarter
of the jobless went through any of the programs named above—and all at wages so
low that they provoked countless strikes and organizing efforts. As Art Preis
puts it in Labor’s Giant Step, “The
highest relief, the most relief jobs, and the biggest wages were in direct
proportion to the number of unemployed struggles.”

The woes of urban workers were
matched by those of poor farmers and farmworkers.The Agricultural Adjustment Act subsidies and
crop restrictions helped the wealthiest farmers disproportionately, while
pushing poor farmers and sharecroppers and tenants off the land. What’s more,
payments for restricting production were made to farm owners who were trusted
to pass along to tenants their share, which of course almost never happened.

According to Art Preis in Labor’s Giant Step, the number of the
unemployed “never fell below eight million during the entire ‘New Deal,’” and was somewhere between 8½ and 11 million at the peak of “prosperity”
just before the August 1937 recession began, and was still at 10 million in
1940.”

Yet Roosevelt
made clear his desire to cut public jobs as soon as possible. He declared: “The
Federal Government with the return of prosperity must more and more narrow the
circle of its relief activities and reduce the amount of Federal revenue to be
expended in the amelioration of human want and distress.” Despite the failure
of this prosperity to appear—even in the first few years after conversion to
war production—Roosevelt continued slashing public works, throwing a million
and a half off the WPA rolls in the spring of 1939, again provoking WPA strikes
and unemployment demonstrations.

Those getting public works jobs
were disproportionately white males, who were typically paid more than women
and minorities (when the latter were admitted at all). The number of jobs was
increased before elections and cut soon afterward. For instance, 400,000 WPA
workers were laid off as soon as Roosevelt won
election to a second term.

Despite all these limitations the
amount of infrastructure built, services provided, artistic activities engaged
in, etc., was impressive. Says Rose: “Workers built and repaired one million
miles of roads and 200,000 public facilities, including schools, playgrounds,
courthouses, parks and athletic fields, swimming pools, bridges, and airports,
drained malarial swamps, and exterminated rats in slums. They created works of
art, gave concerts, set up theaters throughout the country, even in small
towns, set up nursery schools, served over 1.2 billion school lunches to needy
children, gave immunizations, taught illiterate adults to read and write, and
wrote state guidebooks—classics that are still in use. They sewed 383 million
coats, overalls, dresses and other garments, and, using surplus cotton
collected by the Agricultural Adjustment Administration, made more than a
million mattresses that were given to destitute families, as were the garments.…CCC
workers planted 2 billion trees, including many on burned or eroded hillsides,
stocked nearly a billion fish, and built a network of fire-lookout towers,
roads, and trails.”

Schlesinger’s list adds some
crucial infrastructure projects, including sewage and water systems, gas and
electric power plants, courthouses, hospitals and jails; dams and canals,
reclamation and irrigation projects, levees and flood control projects, bridges
and viaducts, docks and tunnels.

Working people can certainly
appreciate the need for all of the above. But the labor and radical movements
had long been demanding such spending and had no reason to feel “grateful” to
capitalist politicians finally granting it only under the twin compulsion of
devastating economic crisis and the threat of revolution.

Besides fear of revolt, Roosevelt had another motivation for such public works as
were undertaken, especially the ones listed by Schlesinger: it was in the
direct interest of his own class to rebuild and extend the country’s
infrastructure. The U.S.
had after World War I become the foremost economic power in the globe. Yet
because of its relative political backwardness, in many respects it still
lagged behind those capitalist powers it had just leapfrogged over in raw
production capacity. The country was running a twentieth-century machine based
on the most advanced private factories and technologies, but was supported by
an often nineteenth-century infrastructure, especially in some of its most
backward or newly developed regions like the South and Far
West.

And this lack of infrastructure was
holding back not only the ability of corporations to make a profit at home, but
also the state’s ability to gear up for the coming war abroad—a war which
Roosevelt was desperate to be part of in order to secure the global markets
which he believed the country’s new economic ascendancy entitled it to.

Thus in the late 1930s public works
programs began more and more to churn out military goods. These programs helped
rebuild the Navy (aircraft carriers, destroyers, submarines, planes, etc.),
helped the Army mechanize, built over 50 military airports, etc. Soon Roosevelt switched from direct government hiring for war
production and began instead shoveling money to private companies to churn out
rifles, tanks, airplanes, and bombs, and even to finance privately-owned
factories to make such goods. (At exactly this time Hitler was engaging in the
same kind of two-track public spending spree, for both civilian and military
use, and with the same dual goal: to stave off revolution and to prepare for
war to secure markets.)

The public works programs also
suffered from being administered by and for a capitalist class wedded to an
anarchic market, rather than by a working class with a material interest in
rational, coordinated production. Thus farmers were paid for not producing, and
crops were destroyed, milk spilled, and livestock slaughtered while millions went
hungry. The same illogic—and fear of setting a precedent that would prove
public works could outproduce private enterprise—meant the adoption of
unnecessarily labor-intensive methods on some sites (for instance, giving
road-building workers picks and shovels instead of the grading and paving machinery
used by private firms).

Roosevelt’s
Antilabor Record

One of the most persistent yet
inaccurate New Deal myths is Roosevelt’s supposed fondness for organized labor
, in particular the false notion that he “gave” workers the right to organize
through Section 7(a) of the NRA. Section 7(a) was in fact granted to try to
dampen a huge strike wave. In 1933 and 1934, way before the famous 1937 Flint sitdown, workers
were sitting down and engaging in other militant forms of strikes for union
recognition. If anything Section 7(a) led to more strikes, because employers
still did not recognize this right “given” to workers. Roosevelt
didn’t lift a finger against the recalcitrant bosses, and even spoke openly of
their right to continue forming company unions (whose membership actually
swelled dramatically after passage of the NRA and only died out after the birth
of the Congress of Industrial Organizations).

Frances Perkins admitted that
Section 7(a) was only put in the NRA reluctantly after protests from AFL
officials. United Mine Workers head John L. Lewis told his biographer Saul
Alinsky, “Roosevelt was not too friendly to
Section 7(a); and if there were any time when I began to question and wonder
and have reservations about the President, it was at that time.”

Nor did Roosevelt
stop the bosses from using armed thugs and city cops to battle strikers. The federally-funded
National Guard was used repeatedly to violently break strikes. After police
called out by Chicago’s Democratic mayor murdered 10 strikers at Republic Steel
in cold blood—all shot in the back—and wounded dozens more, Roosevelt rejected
an appeal from CIO leaders to intervene, and instead declared “a plague on both
your houses” (i.e., both workers and bosses). Roosevelt himself was soon to
send in Army troops to break strikes at war production plants, and during the
war sought to ban strikes altogether.

The depths of Roosevelt’s actual disdain
for militant workers is shown in an appalling quote which passes with little
comment from his hagiographer Schlesinger. When explaining Roosevelt’s hopes
for the Tennessee Valley Authority, Schlesinger tells the story of an administration
member who, on returning from Vienna in 1934,
reported to Roosevelt that Socialists living on
one-acre garden plots had refused to join fellow workers resisting the
murderous attacks of the fascist Dollfus regime. Says Schlesinger, “this
stolidity, which Roosevelt oddly admired, came…from
the fact that they were landowners. His hope, he said, was to avert a
proletarian psychology in America
by giving factory workers a stake in the land.”

Farm workers’ leaders could sense Roosevelt’s disdain as well. Said STFU leader H.L.
Mitchell, Roosevelt “talked like a cropper and
acted like a planter.” And the reason for that, says Schlesinger, was that “to
back the SFTU would have been too unmistakable an affront to the conservative
southern leadership in Congress on which he relied for so much of his legislative
program.”

Racism
in the New Deal

In addition to explicit or de facto
discrimination in the programs and laws described above, Roosevelt – whose
administration rested on an alliance of Dixiecrats and racist Northern urban
party machines — also refused to pass anti-lynching legislation, to abolish the
poll tax, to desegregate the Armed Forces, or to take any other substantive
measures against the country’s rampant, violent racism.

This aspect of the New Deal has
been brought back to light recently in a book by Ira Katznelson. Summarizing
his argument in the Washington Post (“New
Deal, Raw Deal: How Aid Became Affirmative Action for Whites,” September 27,
2005), Katznelson reminds those who would hark back to the New Deal as a
positive example that such “nostalgia requires a heavy dose of historical
amnesia. It also misses the chance to come to terms with how the federal
government in the 1930s and 1940s contributed to the persistence of two Americas.”
He shows how Blacks were excluded from New Deal legislation such as Social
Security, labor laws, the GI Bill, and other programs for education, home ownership,
and small businesses.

The best-known case of such social
exclusion was the exemption of farm and domestic workers from all labor
protections, unemployment insurance, and Social Security programs—an exclusion
also affecting many Latino workers. Even where not explicitly excluded, local
administration of these programs allowed racists to deny benefits to Blacks. In
fact by disproportionately granting some benefits to white workers, the
economic gap between the races was actually widened.

Roosevelt’s
racism also showed in his crafting of the notorious “bracero” program in the
1940s. Under this program big farmers in the Southwest imported “guest workers”
from Mexico to till the fields with virtually no rights and at pitifully low
wages—wages often stolen from them by the bosses and/or the Mexican and U.S.
governments, and which some of the surviving workers are still trying to
retrieve today through the courts! And his forcing of all Japanese-Americans
into concentration camps was not an aberration, as his liberal backers protest,
but part and parcel of his determination to let nothing stand in the way of
securing capital’s dominance at home and abroad.

Women
Get a Raw Deal

Another pro-Roosevelt liberal
historian, Blanche Wiesen Cook, has detailed the discrimination facing women
workers under the New Deal: “FDR’s First 100 Days did nothing for an estimated
140,000 homeless women and girls who wandered U.S. streets and railroad sidings.
New programs ignored the needs of almost four million unemployed women. The
plight of single, divorced, and widowed women was also ignored.”

The programs set up to accommodate
a fraction of the female unemployed suffered from the same spending
restrictions as those employing men, compounded by gender discrimination.
Relief projects were forbidden from competing with private businesses, and
women were barred from work outdoors.

The 300,000 women employed in the
first program were slotted into special “women’s work”: canning and gardening,
public libraries, schools, and social services. Women were employed as
teachers, athletic directors, artists, photographers, librarians, nurses,
performers, musicians, technicians, and administrators. But the vast majority
of women in the new programs were employed in domestic services, mattress and
bedding projects, surplus cotton projects, or sewing and craft projects—and at
lower wages than men on public works.

As with the new construction going
on as “men’s work,” this was all work that sorely needed to be done, and in
many cases provided opportunities previously not available. But the numbers put
to work and the pay received were low here as well. Says Cook: “Women’s
reemployment was slow, sporadic, inadequate. By 1938, 372,000 women had WPA
jobs, but over three million women remained unemployed; almost two million
women suffered the insufficiency of part-time work.”

The New Deal prioritized re-employment of male “breadwinners.”
And whereas under the new Social Security Act, mostly male job titles were
deemed worthy of old-age pension and unemployment insurance coverage, needy
women and children were largely relegated to “relief.” Even after being amended
in 1939 the Social Security Act set up a maddening maze of restrictions for
wives, spouses and widows, limiting the conditions under which women could
qualify. And as with Black workers, in addition to formal exclusion from
programs, women faced discrimination by local administrators denying them even
what they legally had coming to them.

From
New Deal to War Deal

By his second term Roosevelt was facing a rising tide of dissatisfaction
among workers and farmers, as well as demands from the ruling class that
reforms be stopped now that the immediate crisis had passed. Roosevelt
was more than happy to stop the family feud with the more conservative
capitalists disgruntled at the “socialistic” nature of his early projects. But Roosevelt’s turn toward the War Deal wasn’t based solely
on such narrow political calculations: he was in fundamental agreement with his
ruling class colleagues that the country’s economic and social crises couldn’t
be solved within the confines of its borders but required international
economic expansion. And such expansion, given the worldwide extent of the
Depression and the resulting manic search by all imperial powers for new
markets and fields for capital investment both at home and abroad, could only
be achieved by war.

The turn to war production thus
coincided with a turn away from the “New Deal.” The New York Times observed in 1937 that Roosevelt
had “accepted the idea of aiding industry on its own terms,” and CIO head
Philip Murray said there had been no new social welfare legislation since 1938.
Agencies such as the Reconstruction Finance Corporation and the Export-Import
Bank were retooled to aid in gearing up war production (including making huge
grants and loans to military goods manufacturers) and expanding overseas
commerce.

The turn can be clearly seen in the
evolution of what was the New Deal’s most extensive and famous project, the
Tennessee Valley Authority, originally set up in 1933 as a way to provide jobs
and electricity to the impoverished Appalachian region. Once war preparation
began, the electricity from its dams, as well from the new publicly-built Boulder and Grand Coulee
Dams, were harnessed to the wheels of their region’s new war factories. This
included those of Alcoa, the largest aluminum manufacturer in the world, which
provided this essential material for bombs and warplanes. TVA-generated power
was also critical for building the first atomic bomb. To manufacture its
nuclear materials the government built the city of Oak Ridge from scratch in the Tennessee
Hills, its location chosen because of proximity to TVA dams.

Preis summarizes the switch thus: “The
‘New Deal’ proved to be a brief, ephemeral period of mild reforms granted under
pressure of militant mass action by the organized workers, both employed and
unemployed. By late 1937, Roosevelt had
adopted the policy of propping up basic industry with government war orders,
while cutting relief expenditures even though unemployment rose. The ‘New Deal’
became the ‘War Deal.’”

Social
Security

One of the most treasured gains of
this period—and one now under heavy attack—are the old-age pensions provided by
Social Security.

Here too Roosevelt’s
legislation can be attributed directly to mass pressure and fear of deeper
revolt. For decades radicals had been exposing the abandonment of the elderly
by employer and government to miserable, poverty-stricken existences and early
death. In 1933 the Townsend movement, centered on a program of a $200-a-month
pension for every senior, achieved a mass following almost overnight.

In 1935 Roosevelt
signed the Social Security Act. It included provisions for old-age pensions and
unemployment insurance. Agricultural and domestic workers were excluded, as
were workers in nonprofit organizations, self-employment, small businesses, and
other sectors—including laundry workers, seamen, and educational and government
workers. As a result, only half the work force was included—and over 80 percent
of Black women workers were not covered. Workers excluded from the main Social
Security program became eligible for Old Age Assistance and Aid to Dependent
Children. Both required a means test—i.e., proof of destitution.

The foremost proponent of liberal
reform in this area, Abraham Epstein, analyzed the Act in the pages of The Nation. Epstein had in fact coined
the term “social security” to highlight the need not just for old-age pensions
and unemployment insurance but also health insurance, care for the dependent
and disabled, etc.

Epstein wrote that “the present law
seems doomed from the start by its complex, slovenly, and mangled character” because
of its unintegrated character and the dependence on its various parts of a
mish-mash of federal, state, and local programs, laws, and administrative
agencies.

Epstein also noted how far behind
the U.S. was compared to other capitalist nations: “For more than half a
century social-insurance programs have been keen political issues throughout
Europe, but here there has not been even academic interest; our newspapers gave
the subject no notice until a year ago and have given it very little since.
Everywhere abroad social-insurance measures have been championed chiefly by
organized labor. Our labor movement has either opposed them or given
half-hearted and uninformed support.” (By labor movement he obviously meant the
trade union leadership, such as AFL head William Green—who even opposed
unemployment insurance!—and in this regard as in most others hardly reflected
the needs and sentiments of his members or of the millions ignored by the
Federation.)

Epstein also decried the financing
of Social Security by payroll taxes. In other countries, he said, the “well-to-do…have
shared in the maintenance of the aged poor since the establishment of the
Elizabethan poor-law system three centuries ago.” But the new bill “transfers
the entire burden…to the backs of the young workers and their employers… Since
industry will make every effort to pass on its levy to the consumers, it means
that the young employees—in their dual role of workers and consumers—will bear
the major cost…No other nation has ever put into operation a plan of this
nature without government contributions derived from the higher-income groups…in
placing the entire burden of insecurity upon the workers and industry, to the
exclusion of the well-to-do in the nation, the present social-security bill
violates the most essential modern principles of social insurance.”

In fact most of the imperial rivals
of the United States
had long before instituted some form of government-provided old-age pension.
Here, as in the case of the infrastructure built by public works, the Social
Security Act was a belated recognition of this country’s need to catch up with
its rivals.

A
New “New Deal”?

Bush’s plans to dismantle Social
Security have met fierce opposition, primarily because working people treasure
the gains made under the program, just as we treasure the housing, schools,
hospitals, levees, roads, and other public works built in the 1930s. But we
must remember, as Art Preis said, that these precious gains were granted “under
pressure of militant mass action by the organized workers,” and not as gifts
from benevolent rulers. That’s the only way we can see through the false claims
of today’s politicians claiming to be “New Dealers” and fight independently for
all that we need and deserve.